Category Archives: Philanthropy

For some it’s not about people, nor ethics; just numbers.

moneyvspeoleA former hedge fund manager who bought a drug company has hiked the price of a generic drug 55x to  pay for the purchase.  The drug was $13.50 a dose but is now $750.00.   It costs $1 to produce.  The drug treats toxoplasmosis and is widely used by sufferers of AIDS.

So clearly Martin Shkreli, the capitalist in question, is all about the money.  No morals.  No philanthropy. In fact rather the opposite.  What does that say about our society?  When the winners take all?  It’s not that he should be punished.  It’s not that his wealth should be confiscated.  It’s that we should ask ourselves what kind of civilisation we are choosing when this kind of behaviour appears “justifiable”, because it doesn’t seem just to me.

If the highest achievers, the brightest stars, the richest, the winners are only interested in taking more, shouldn’t we all wonder what morals our civilisation promotes?  It’s not that people are bad – everyone’s “good”.  But the result of all our choices promotes a dynamic which appears quite feudal and therefore inflexible, often unfair and probably dysfunctional.  Certainly we are seeing the cracks in our civilisation – economic crisis, immigration crisis, food crisis, …

eatingmoneyThe solution?   Change our choices.  Each of us can make small changes which determine the shape of civilisation.  What we eat, what we wear, what we consume, what we waste.  Our individual behaviour results in the civilisation we have, including a hedge fund manager taking more stuff from people in already difficult circumstances.

BBC: US pharmaceutical company defends 5,000% price increase

Good people are dying. It’s going to get worse before it gets better.

screenshot-baltimore-riot-001-04272015Tension is rising is the USA.   Two US police officers were shot dead in Mississippi.  Last week.a New York police officer  was shot in the head while questioning a suspect from his police car.  And riots bubbled in Baltimore after a suspect died in police custody.  The mood is confused and angry.

The issue is justice.  Minorities in America (non-whites, females, etc) have been depreciated by law and culture for too long.  The solutions of education, jobs, and infrastructure have been neglected in favour of guns and incarceration.

System change is afoot.  We can choose a soft landing by opening up opportunities, sharing resources, and the “rich giving to the poor”.  Even if we do, cynicism and history means people will be sceptical of change for a while.  But the longer we continue using command and control approaches the worse it will get.

medrefugeesIn Europe, refugees are dying by hundreds as they try to escape feudal regimes, bereft of opportunity.  Many are people like us – farmers, teachers, postal workers, shop keepers, even doctors and engineers.  We can do more to stop them drowning, though, the real solution is again to promote education, infrastructure and jobs while reducing access to guns.

As long as we continue to turn a blind eye to unethical behaviour in the middle east, even to the extent of investing in weapons, the violence will continue.  As long as we allow capital and corporal punishment in our own judicial systems the global moral compass will continue to spin.

nepal-quakeWe can’t stop earthquakes, like the recent one in Nepal.  But we spent fewer, even no, resources on weapons, there would be more for education, infrastructure and jobs and emergency supplies for inevitable tragedies which will become more invasive as climate change and biodiversity loss impacts food supplies and our habitat.

Sadly, the push back against ignorance, immorality and injustice is going to get worse.  The sooner global cultural enlightenment can emerge the sooner humankind’s destruction of our own living systems will be reversed.

On a happier note, dancing helps as Dimitri Reeves showed …. so let’s show a bit of love.dimitrireevesdancing

BBC: Baltimore riots: ‘Without change more cities will burn’

BBC: Nepal Earthquake

www.DimitriReeves.com

The end of fossil fuels.

The Rockerfeller Foundation plans to divest fossil fuel assets in its portfolio.

The Fund will first focus on limiting its exposure to coal and tar sands, with a goal to reduce these investments to less than one percent of the total portfolio by the end of 2014. It is planning for further divestment as quickly as is prudent over the next few years.

Rockefeller Brothers Fund director Stephen Heintz said the move to divest from fossil fuels would be in line with oil tycoon John D Rockefeller’s wishes,

“We are quite convinced that if he were alive today, as an astute businessman looking out to the future, he would be moving out of fossil fuels and investing in clean, renewable energy,” Mr Heintz said in a statement.

The Rockefeller Brothers Fund advances social change that contributes to a more just, sustainable, and peaceful world.

This is part of a growing movement to divest from the fossil fuels causing climate change and invest instead in clean, sustainable energy.  DivestInvest Philanthropy  reached an historic milestone today of $ 50 billion in pledges.  Over 800 global investors have now committed to divest their holdings in fossil fuels.

Need I say more?  This has been a long time coming, but it is the start of a sea change in opinion and investment behaviour.  This is not just talk, actual money will be divested from fossil fuel businesses and reinvested in alternative energy businesses.  And yes, the timing was influenced by the UN climate change meeting tomorrow, but the plan was set in motion earlier and will continue to be rolled out and built upon over the coming months.  The energy sector is going to be volatile for a while.

Rockefeller Brothers Fund’s Divestment Statement

Press release on Divest-Invest Philanthropy’s website

BBC: Rockefellers to divest fossil fuels

Sharing makes you happy.

A survey by Gallup on the relationship between well-being and community service shows a direct positive correlation. The overall pattern cut across income and age group.  The Gallup analysis also found a connection between community service and key indicators of emotional health, such as stress and worry.

gallupwellbeing20140812

Sadly it seems that many more U.S. adults do not receive recognition for community service, so this  study suggests that communities would be wise to do more to promote opportunities for residents to volunteer and engage in community service and businesses can help by allowing their workers time to engage in volunteer activities.

Gallup: Americans Serving Their Communities Gain Well-Being Edge

CityLab by The Atlantic: There’s a Remarkably Strong Link Between Community Service and Happiness

 

What’s So Scary About Smart Girls? They might fix things.

What’s So Scary About Smart Girls? is a provocative read in the NYT.  It makes some sad observations and reiterates what evidence proves: that education makes life better and that emancipating and liberating females is the way to realise the great potential of humanity’s “better half”.  For example:

  • If you want to mire a nation in backwardness, manacle your daughters.
  • To fight militancy, we invest overwhelmingly in the military toolbox but not so much in the education toolbox that has a far better record at defeating militancy.
  • For each additional year of primary school, a girl has 0.26 fewer children. So if we want to reduce the youth bulge a decade from now, educate girls today.
  • Girls’ education can, in effect, almost double the formal labor force.
  • Educating girls and empowering women are also tasks that are, by global standards, relatively doable. We spend billions of dollars on intelligence collection, counterterrorism and military interventions, even though they have a quite mixed record. By comparison, educating girls is an underfunded cause even though it’s more straightforward.
  • It’s estimated that 100,000 girls under 18 years old in the United States are trafficked into commercial sex each year.

(PestalozziWorld educates children for a better world and prioritises opportunity for females.  Camfed is here.)

Show love! Philanthropy doesn’t match wealth growth.

The Chronicle of Philanthropy notes that “Gifts surge from US donors“.  That’s good, especially in difficult times.  But BloombergBusinessWeek read between the lines and saw that “Billionaires’ Wealth Is Skyrocketing. Their Philanthropy Is Not“.  Sadly.

It is unfortunate because this is another sign of a widening wealth gap between the top and everyone else, between the owners of capital and everybody else.  We would not want to legislate philanthropy, aka higher taxes, but an unjust system, in which the benefits of modern technology are enjoyed by less than 1%, is unstable and prone to unhappiness.

The thoughtfulness that goes in to giving also matters.  The more globally responsible, the better.  Very local or lost causes are not priorities in a world creaking under the weight of human pollution.  Education is top of our list because it is the path to opportunity and enlightenment.  Protecting nature (from humanity) is a given.

Obama: The idea that so many children are born into poverty in the wealthiest nation on Earth is heartbreaking

Barack Obama gave a speech in Washington DC which described economic themes for the rest of his term.

“The combined trends of increased inequality and decreasing mobility pose a fundamental threat to the American Dream, our way of life, and what we stand for around the globe,” he said.

“The idea that so many children are born into poverty in the wealthiest nation on Earth is heartbreaking enough. The idea that a child may never be able to escape that poverty because she lacks a decent education or healthcare, or a community that views her future as their own, that should offend all of us and it should compel us to action.”

This comes as Pew Research finds that for the first time in 40 years, a majority of Americans say the US plays a less important and powerful role in the world than it did a decade ago.  It also found that 70% of Americans saw the US as less respected than in the past

The survey also found that there was a mistaken belief among many that China is the world’s top economic power – 48% of respondents thought so. Just 31% correctly said it was the US.  America’s gross domestic product is nearly twice that of China, according to World Bank data, although the gap between the two has been closing.

BBC: Obama calls for action on ‘profoundly unequal’ economy

BBC: Americans see a US in decline, finds Pew survey

Babies in a bucket

From CNN Faces of the world: National  Geographic photographer’s amazing portraits

babies in a bucket

Babies in a bucket, in a tent city after the earthquake, Port-au-Prince, Haiti, 2010

“When the quake hit on January 12, 2010, I had been staying in a decadent US$10,000 a night villa while photographing the stunning Amanyara on Turks and Caicos Island. One 30-minute flight later I couldn’t have been farther from that reality. I met Cecile who offered to let me to sleep outside of her home with her extended family, who had nowhere else to go. It always seems to be the people who have the least who give the most.”

Sadly, evidence proves privilege breeds corruption.

It is convenient to assume that people without resources are prone to unethical behaviour, especially if you’ve got lots of stuff.  You might imagine that someone who lives in a cardboard box is likely to steal, simply because they need to eat.

But the opposite is true.  If you’ve got the stuff, prepared to be guilt tripped.  The richer you are, the more likely you have shallow ethics.  That doesn’t mean everyone is like that, in fact most philanthropy comes from the wealthy (they’re more able to give too), but it does show that, as a group, the rich/powerful/privileged tend to behave less ethically.  The richer you are the more you are likely to steal, lie and cheat.

Well, maybe that’s news to people who live modest lives.  But for the rest of us who can’t get enough stuff from the latest phone to car to fashion, we might not be as lovely as we think we are.  That’s the truth.

This is one summary of empirical (scientific) evidence:

Seven studies using experimental and naturalistic methods reveal that upper-class individuals behave more unethically than lower-class individuals. In studies 1 and 2, upper-class individuals were more likely to break the law while driving, relative to lower-class individuals. In follow-up laboratory studies, upper-class individuals were more likely to exhibit unethical decision-making tendencies (study 3), take valued goods from others (study 4), lie in a negotiation (study 5), cheat to increase their chances of winning a prize (study 6), and endorse unethical behavior at work (study 7) than were lower-class individuals. Mediator and moderator data demonstrated that upper-class individuals’ unethical tendencies are accounted for, in part, by their more favorable attitudes toward greed.

Higher social class predicts increased unethical behavior

The psychological consequences of money.

Power, Distress, and Compassion – Turning a Blind Eye to the Suffering of Others

Social Class as Culture – The Convergence of Resources and Rank in the Social Realm

Social Class, Sense of Control, and Social Explanation

Class and compassion: socioeconomic factors predict responses to suffering.

Warm glow and charitable giving: Why the wealthy do not give more to charity?

 

Average America vs the One Percent

The greedy, filthy millionaires

The real ‘1 percent’

For the Love Of Money: Wealth and Compassion

Does philanthropy work?

Yes, of course it does.  But being an analyst, and one who must count the pennies too, it has always been a pertinent question.  I’ve always found it difficult to give money to an organisation that has high paid, educated staff taking a third to half the donations in administrative overhead.  I know that when I fly to Africa to help at the village, the cost of the flight alone could feed, house and educate a child in secondary school for a year.  That makes me want to have commercial disciplines and performance metrics in philanthropy.

Fortunately, we are associated with PestalozziWorld which has a clear cut policy of having all donations go to serve their beneficiaries; trustees pay all administrative overhead.  That means operations are necessarily frugal, while they focus on results.

If you have worked hard for your wealth and now enjoy the happiness that comes from making other people’s lives better, you probably also want to bring professionalism and commercial standards to your philanthropy.  Take five minutes to have a look at this article by Guy Sorman in City Journal (copied below) which discusses some of the leading executive philanthropists, like Robin Hood (a favourite of mine) and the Gates Foundation.

Can charities accurately measure their effect on society?

On October 19, 1987, the Dow Jones Industrial Average plunged 22.6 percent, a single-day loss unequaled before or since on Wall Street. To most observers, the Black Monday crash came without warning and remained deeply mysterious ever after. The stock market, many concluded, was like the weather: from time to time, an unpredictable convergence of phenomena would have catastrophic effects.

Yet at least one man believed that the crash was coming. In Greenwich, Connecticut, money manager Paul Tudor Jones had been studying the accelerated methods of buying and selling stocks that computers had made possible. The speed of transactions, he felt, had inflated prices, and a major correction was inevitable. Through his hedge fund, Tudor Investment, Jones bet everything on a downward turn. Black Monday tripled his stake, making him one of the country’s richest financiers. In the world of stock-market speculation, a single big win is enough to attract a clientele, whose holdings one can then manage without taking excessive risks, and that’s just what Jones did.

But he didn’t stop there. Jones was born in Tennessee into a religious family; as a young man, instilled with the evangelical values of the South and outraged over the poverty of blacks and working-class whites, he and his congregation had joined civil rights protests and handed out clothing and meals to Tennessee’s poor. Perhaps that background explains why he saw Black Monday as the opening of a new era in which the divide between America’s rich and poor would worsen, threatening the social order. At least part of his prediction proved accurate: while the poor in the United States haven’t gotten poorer since 1987, the distance between their economic position and that of the wealthy has widened.

Jones believed that private philanthropy could help the poor improve their lot and reduce inequality—but only if that philanthropy was effective. Such large foundations as Ford and Rockefeller were fossilized bureaucracies, better at paying their own administrators than at lifting up the worse-off, Jones thought. “Charitable institutions are often content when they build a big budget and spend as much as possible,” he explains 25 years later. “Spending is their criterion of success, which is opposite to how a business operates.” He decided to try to revolutionize social philanthropy by infusing it with methods from the world of finance, seeking to measure the result—the “output” produced—rather than simply track the money spent, the “input.”

Can philanthropy be calculated that way? In the private economy, of course, everything gets measured in dollars. But how can one measure the benefit of a drug addict detoxed or a child properly educated? Economists have long claimed to be able to quantify all human actions—to measure the value of a life, for example, or the added benefit of an additional year of school. Yet no philanthropic institution had ever functioned on such a rigorously quantitative basis. Why did Jones believe that it was necessary? “The resources directed to philanthropy are by definition finite, like all resources,” he argues. “It is legitimate and respectful to donors as well as to recipients to see that these rare resources are directed as a priority to projects that have the greatest measurable results.” Not measuring results could lead to wasting donations.

Moved by the gospel of measurement and seeing no philanthropic organization honoring it fully, Jones created the Robin Hood Foundation in 1987, locating its offices in Harlem. To differentiate their outfit from the thousands of other groups fighting poverty, Robin Hood’s founders—Jones, three fellow financial managers, and a New York–based social-services administrator, all in their thirties—chose not to name it after themselves. (Jones finds it hard to understand the vanity that leads some donors to inscribe their names on museums.) Nor did he wish to create an endowed foundation that would simply spend a fraction of its capital annually—for instance, the minimum 5 percent or so mandated by the IRS. Rather, he wanted to raise a lot of money and distribute it immediately. The foundation has done exactly that since its inception, collecting roughly $150 million per year, mostly from Wall Street, and spending it in New York City—all $150 million of it, every year. Dedicating all funds raised to beneficiaries is rare in the philanthropic world, where staff salaries and overhead frequently take a big cut. Robin Hood can put every cent it raises into its programs because its board of directors pays those administrative costs.

The costs include 25 researchers who work to make Robin Hood’s donations “the most effective in the world,” says David Saltzman, the foundation’s director. They measure effectiveness with a system called RM, for “Relentless Monetization,” which was developed by Michael Weinstein, an economist at the foundation and the coauthor of The Robin Hood Rules for Smart Giving. Most philanthropists let “instinct, passion, and illusion” guide them, says Weinstein; philanthropy needs to become more quantitative. “All philanthropic activity can, in principle, be monetized,” he explains, “because it involves spending by the donor and a measurable benefit for the recipient”—access to a school, or better hygiene, or access to new services. To proceed without quantifiable information, Weinstein contends, might give a donor or an administrator a clear conscience or improve his or her reputation, but it’s ultimately irresponsible, since charitable dollars might not benefit the neediest recipients and might even do damage.

Here’s an example of Robin Hood’s quantitative approach in action. The foundation sets a goal: improving the health of children living in a certain poor New York neighborhood. The most productive intervention, Robin Hood discovers, is to increase the proportion of neighborhood children graduating from high school, which gets a bigger bang for the buck even than getting them to the doctor more regularly. A typical graduate lives 1.8 years longer in good health than a typical nongraduate, research from Columbia University’s Peter Muennig shows. That extra time is worth about $50,000 annually, according to insurance data, so a high school graduation is worth roughly $90,000—that is, $50,000 times 1.8 years. Further, studies show that a high school graduate earns at least $6,500 more per year over the course of his career than a nongraduate does—equivalent to $120,000 if it were spent in advance. So every philanthropic investment that results in the graduation of a student who otherwise wouldn’t have graduated, RM calculates, produces a monetized social benefit of $210,000. Such an investment is therefore a financially positive one if it amounts to less than $210,000. Above that figure, the return on investment is negative.

The difficulty in making this calculation stems from the fact that it adds income, which is easy to measure, to the harder-to-quantify benefits of life and health. But the insurance industry makes this kind of assessment all the time. And Robin Hood’s goal isn’t to arrive at incontestable numbers but rather to present donors with figures that can help guide giving decisions.

The foundation’s approach makes it easier to assess the effectiveness of institutions. If a school receives a grant that helps, say, ten disadvantaged students graduate who’d otherwise drop out, the total social benefit adds up to $2.1 million. One can therefore understand the reasoning behind Robin Hood’s grant to the acclaimed Promise Academy Charter Schools, part of Geoffrey Canada’s Harlem Children’s Zone, a nonprofit that provides extensive services to the poor. Promise Academy graduates all its disadvantaged minority students. Can we be certain that, without this grant, the school wouldn’t have achieved similar results? A major difficulty in determining philanthropic effectiveness lies in comparing action with inaction. In the case of the Promise Academy schools, a comparison, however imperfect, is possible with other schools in the area with students from similar backgrounds; the Promise Academy’s results are indisputably superior.

Robin Hood’s number-based standards often result in rethinking programs. For example, in 2006, it established “Single Stop” offices within the Rikers Island jail complex to educate prisoners about social services available to them at the end of their sentences. The foundation figured that if the newly released could more readily access the services, which included drug-treatment and job-training programs, their transition into society would go more smoothly. The success of the effort, at least on its own terms, appeared incontestable at first. After all, one-third of those entering Rikers had received some form of aid before their first incarceration; after the Robin Hood initiative was up and running, two-thirds of those released accessed services. The foundation attributed this increase to its own work.

But then prison renovations cut in half the space available for Robin Hood’s prison operation, and halved, too, the number of prisoners who could participate in it, whom the foundation now selected by lottery. Yet despite the shrinking of the program, the overall proportion of exiting prisoners accessing social services was the same: two-thirds. Many prisoners had clearly educated themselves about the help that they could get upon release, but the Single Stop office had made no difference. The prisoners who had participated in Robin Hood’s initiative, it turned out, had already known that they could get help outside; those ignorant of the services had never bothered to visit the office. Robin Hood, working with Rikers officials, has now changed the program to focus on that uninformed one-third, many of whom are particularly disorganized young women. “Never fall in love with your philanthropic work, take careful note of numbers, and check for biases that exaggerate the impact of a grant,” says Weinstein, ticking off the foundation’s methods. “Then check again.”

Robin Hood’s approach encourages humility, as another example shows. A correct tax filing can provide rebates and other subsidies to those of modest income but only if they can find a way through the labyrinth of the U.S. tax code. A Robin Hood program accordingly offers free tax-return services to the New York needy—about 50,000 of them yearly, who wind up collecting a total of about $120 million annually from the adjusted returns. Though this looked like a smart philanthropic investment at first, Robin Hood compared those served by its tax program with other groups and discovered that the results weren’t that impressive. Two-thirds of the amount recovered by the adjusted tax returns would have been received anyway, the analysis showed, because most of the Robin Hood clients would have sought help from a relative or used a free Web service to do their taxes. The foundation’s return on investment had thus fallen two-thirds. Nevertheless, Robin Hood continues to support the initiative.

Robin Hood’s evaluation system has its critics. Some are doubtless irritated by its implication that many humanitarian projects are undertaken blindly, based on poor information, and driven more by fashion than by a real need to improve the condition of the poor. Relentless Monetization challenges all that is haphazard, narcissistic, superficial, and even counterproductive in social philanthropy.

But others, such as billionaire philanthropist George Soros, mount more substantive objections. For one thing, he says, even careful measurement can’t protect philanthropy from unintended consequences. Soros cites the Bill and Melinda Gates Foundation’s African vaccination program, which had all sorts of metrics in place, as Laurie Garrett reported several years ago in Foreign Affairs—but nevertheless damaged the existing health infrastructure of African villages by drawing health workers to its own, better-paid initiative.

The director of Soros’s Open Society Foundations, Chris Stone, who long taught nonprofit management at Harvard University, adds that quantification is difficult when the philanthropist lacks solid information about the value of a particular approach: “When we fight poverty, discrimination, addiction, or oppression, we do not know what works and what doesn’t.” The only way to learn is to experiment with innovative approaches, in full awareness of the possibility of failure—which is more likely than success. “How is it possible to quantify what you don’t yet know?” he asks. When Soros took the initiative in the 1980s to back independent journalists in Communist Eastern Europe, his intuition that doing so could have long-term positive effects was impossible to quantify. Yet those journalists eventually played a role in the democratization of their countries and the creation of a free press, Soros points out. Of course, some counting was necessary: he had to decide which journalists would get money, and in which countries. “Yet I did not quantify in a narrow sense,” he says. “I experimented and refined my strategic choices based on my failures and successes.” Soros adds that philanthropists should assess and revise their goals continually: “Freedom of speech, the fruit of hard struggle in the 1990s, has more recently become a tool in the hands of demagogues and enemies of liberal democracy in Hungary and Russia.” The philanthropist who wants to encourage an open society in Eastern Europe must now foster more than free speech alone.

Both Soros and Stone further reproach the quantitative method for ignoring the human dimension of philanthropy. Those who become philanthropists after making fortunes in the highly monetized world of business tend to be attracted by the very different values that should guide the nonprofit sphere, with numbers giving way to love for one’s neighbor and spiritual concerns. To reduce everything to counting, they charge, is to contravene the act of giving. And quantification also fails to take into account the psychological benefit that philanthropic work can bring to its beneficiaries. Soros money underwrites evening classes for schoolchildren in rougher sections of Baltimore and New York with no expectation of improving their academic achievement; the end is simply to bring parents an incalculable sense of security.

The Robin Hood Foundation also supports evening classes in New York but tries to measure their scholastic impact. “We run our shops differently, though we respect one another’s efforts,” Weinstein observes of Soros (who is himself a donor to Robin Hood). In fact, the Open Society Foundations will join Robin Hood, the New York City education department, and the city council in a partnership to advance literacy in the city’s middle schools.

Confronted with Soros’s and Stone’s critique, Weinstein sees less an attack on quantification than an invitation to improve it. Relentless Monetization is an imperfect instrument, he admits, “but who today has anything else to propose in order to ensure the optimal allocation of the scarce resources of philanthropy?” Further, Robin Hood is aware of the need to experiment, but it insists on collecting data on unproved programs, so as to provide a basis for evaluation when particular initiatives come up for grant renewals. Let me confess a personal interest in this question. When I was directing a French humanitarian organization, Action contre la faim (Action Against Hunger), I would have appreciated the help of Weinstein’s methods. The RM system provides a strong incentive to limit waste and can be a check on philanthropic giving that does little actual good or, worse, commits harm. “Interventions should not be funded because they look good, or even because they are good, but because they are the best available options,” Weinstein says.

Still, one can’t easily dismiss Soros’s and Stone’s arguments. It’s even possible that, as Soros suggests, “the quantification of goals discourages philanthropists from fighting certain inequities because they are hard to measure.” If charities do start shifting their priorities toward programs that lend themselves to measurement, something important could get lost in the process.

Guy Sorman, a City Journal contributing editor and French public intellectual, is the author of many books, including Economics Does Not Lie. His article was translated by Alexis Cornel.